[Image of an AI wording, Photo Credit: Unsplash]

New Chinese artificial intelligence, named R1, developed by a company Deepseek, has become a huge issue to the AI industry.

Deepseek was launched back on January 20, 2025 which went viraled with its outstanding performance considering its low development cost.

Deepseek claimed that it only cost them 5.5 million dollars to create R1- approximately  1/18th of the cost it required to create Chat Gpt, which currently dominates the AI market.

One of the major contributions to such a remarkably low cost is the usage of inexpensive graphics power units.

GPU (graphics processing unit) plays a crucial role in the AI market as it is a major piece to enhance AI’s on their computing speed and efficiency.

Deepseek reportedly  utilized the H800 chipset from Nvidia, which is a downgraded GPU of H100.

H100 is a GPU that was originally  supplied exclusively to China and to avoid export restrictions, the chip was downgraded: the United States made a regulation that prohibits the U.S companies from exporting their technologies to China for their AI business monopoly.

What’s captured  widespread attention is R1’s capability to create a high performing AI with such a modest budget.

Despite costing  a 1/18th of the price, experts found out that R1 is capable of performing in a similar range to Chat Gpt.

Surprisingly in some fields, R1 even outperformed Chat Gpt.

With these impressive results, R1 is currently getting a huge attention in the market.

On the other hand, audiences are focused on other debates that followed after R1’s release.

What is in a major controversy is the unnecessariness of high costing GPUs. 

Historically, Nvidia's expensive GPUs were perceived as to be the key to development of AI performances. 

However, with Deepseek almost showing an equivalent performance as the ones that have used premium chipsets has triggered the audiences to question if Nvidia’s premium chipsets are unnecessary.

As a result, Nvidia’s stock has plummeted nearly 18% ever since deep seek and R1 got issued.

Due to the drop, Nvidia has lost 600 billion dollars in a single day, reported as to be the biggest stock drop in Nvidia’s history.

The impact has not been limited  to Nvidia; other AI related businesses were affected as well by the so-called “Deepseek shock”. 

Moreover, China’s rapid escalation in the AI market is a huge matter on the internet. 

With a Chinese company outperforming multiple U.S businesses, China has proven their potential to challenge the throne of the U.S.

While partial attention remains focused on the release of R1 from a Chinese company, the majority of the people on the internet are concentrated on criticizing the U.S government.

Netizens are in a frustration since the U.S government before had expanded the budget of investment on AI business but couldn’t show any difference but to get caught up by China.

In response, Donald Trump, former/re-elected president of the United States, approved emergency declaration with construction of power plants for AI to accelerate the development.

Trump is expected to announce further policies and regulations aimed to further exceed in the AI market.